The Market’s Personality: Dispositionalizing Situational Characters

Joel Garreau and Shankar Vedantam have a nice article, “Dealing with Scary Mr. Market,” in Tuesday’s Washington Post about the human tendency to see human tendencies in non-humans. The inclination to anthropomorphize is, in our view, better understood as another example of the inclination to dispositionalize — a misleading bias even when directed at the human animal.

Here are some excerpts from the article.

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A rough beast prowled yesterday. If you read the business press, the market woke up with “jitters” after playing “a game of chicken.” It wound up suffering from “dizziness,” recoiling from a “campfire” possibly turning into a “forest fire,” or a destructive “tsunami.”

Really?

The market has a personality? Intentionality? A psychology? It can save us with transcendent behavior or ruin us like a demon?

What’s up with the way we anthropomorphize markets — the way we tell stories about them as if they are creatures with minds of their own?

“We did a study in which we had random shapes on a computer screen bouncing around. Within two minutes, people had stories. The circle was evil and was chasing the little triangle, eating him up. Some other shape was protecting him. It’s incredibly natural for us to do it,” Ariely says. “We want to see causality. We want to understand the world. We want to see order. If things are just random, it’s not comfortable. We find patterns when there are no patterns. We’re really, really good at this. It’s important to our psychological well-being. If we thought we had no control and no understanding of what’s happening, it would be very tough.”

Making amorphous forces into characters we can grapple with has a long history. The Greeks made the idea of wisdom into the goddess Athena. To this day, we name our storms: Hanna, Ike.

Our markets, in turn, have invisible hands, bulls and bears, even “animal spirits,” as John Maynard Keynes in 1936 called the optimism or pessimism that can drive economics.

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The greater the unpredictability of a system, the more likely people are to ascribe volitional qualities to it, says Nicholas Epley, a professor of behavioral science at the University of Chicago.

Rocks or billiard balls don’t move unpredictably. But if a billiard ball were suddenly to move on its own, we no longer would have an explanation for what we are seeing and would ascribe intentionality to the ball.

Epley has also found that people are more likely to anthropomorphize when they are feeling lonely. It is as though seeing humanlike qualities in inanimate objects and systems can give us a sense of social connection.

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“In the same way being deprived of food makes you hungry, and eating makes you feel better, so, too, when you are deprived of predictability and social connection, anthropomorphism can be satisfying,” Epley says.

“The most impressive aspects of the human brain involve making sense of our social environment,” says George Loewenstein, a professor of economics and psychology at Carnegie Mellon. “It’s natural when we confront the inherently incomprehensible. We often talk about countries as if they are individuals.

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In an unusual set of experiments published earlier this year in the journal Organizational Behavior and Human Decision Processes, Columbia University business school professor Michael Morris showed that up markets are more likely to be given human characteristics than crashes.

We have the Dow “fall like a brick” but “climb to a new high.” You see the financial markets “drop off a cliff” — an inanimate object moving as a result of gravity — but “recovering lost ground.”

“There is a lot of evidence that our brains categorize something as animate or alive to the extent it moves in ways that a physical object can’t,” Morris says. “One cue that something is alive is if it moves uphill. Rocks never roll uphill. If you see something rolling uphill, you make an ontological judgment that the thing is alive.”

Morris found that anthropomorphizing markets has serious risks. Volunteers who heard market movements described in human terms were more likely than those given inanimate descriptions to believe that market trends were likely to continue.

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To read the entire article, click here. For a related Situationist post, see “Seeing Faces.” Situationist contributors, Jon Hanson and Michael McCann argue in their forthcoming article “Situationist Torts” (downloadable here) that the tendency to dispositionalize situational characters distorts our understandings of everything from people to law and from legal theory to legal pedagogy.

Anonymoussaid

This is an interesting post. Earlier this year, there was a special issue of the journal “Social Cognition” devoted to anthropomorphism. Each of the articles focused on different topics, like television characters, pets, nature, etc.